Trust Issues Part 3 - The Seamy Side of Business
Here Are 7 Situations Along With Expert's Advice For Overcoming Trust Issues
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There are many scenarios in which distributors can lose trust for the people they work with. Here are seven situations along with an expert's advice for how to overcome each one.
Scenario 1: The Bait and Switch
A distributor presents a variety of campaign ideas to a new prospect and then finds out that they're shopping those ideas around to others.
Expert Advice: It's common for customers to look for the lowest price on just about anything these days, so you can't take these kinds of things personally, says Kenneth Power, principal with High Power Management. "If you put a lot of effort into coming up with those ideas and making the presentation, then I'd call the prospect and gently suggest that you're the one who can best fulfill the campaign," Power says. "I'd also try to delve deeper on their pricing needs, because that can give you insight on ideas and products to suggest." Power also says that with new clients, distributors may want to hold some of the details of a suggested campaign back until a contract has been signed. "Don't give away all of the information," he says, "until you know you're getting some money back."
Scenario 2: Direct Dealings
A distributor finds out that one of its preferred suppliers is selling direct through its own distribution business – effectively making the supplier a competitor.
Expert Advice: "Who you purchase products from is entirely up to you," says Peter Simons, president of coaching and business consulting firm 312 Management Consulting. His point? You have a choice when it comes to the suppliers you work with, and even if this company was a good supplier for you, it may be time to move on. "If you don't trust a vendor implicitly, then a business partnership is doomed," Simons says. "You're always going to question whether their motives are on the up and up." However, Simons points out, you also have to do what's best for your own business and evaluate the situation realistically. "Does their distribution operation really impact your business?" he asks. "If not, and they've been a good partner for you, then don't worry about it. Your own business is what matters most. Does the relationship benefit you or hurt you? That should really be all that matters."
Scenario 3: Margin Miscue
Your company has a stated margin goal that salespeople are supposed to sell to on every deal. However, one rep has recently been going lower than the margin just to close deals.
Expert Advice: It's time for a serious talk with the salesperson, and a reevaluation of your compensation system, Simons says. "You obviously have the margin goal in place for a reason, and you should clearly let the employee know what the reason is," he says. "Trust is a two-way street. You need to trust that salespeople will do what you want, but they also need to trust and acknowledge the company's goals." Separately, Simons says, the salesperson's pay plan shouldn't even allow for such a margin miscue. "If the company is so focused on the margin goal, then the sales compensation plan should call for no commission payouts unless that goal is hit," says Simons. "They need to be financially motivated to do what the company wants."
Scenario 4: Partnership in Peril
A distributor partners with a local ad agency to provide promotional products for the agency's clients and campaigns. However, the distributor finds out that the agency is also selling promotional products.
Expert Advice: As in the earlier scenario in which a supplier is selling direct to clients, distributors need to evaluate what's best for their business. Since this is a local ad agency, they may actually become a legitimate competitor for this distributor – in which case, experts suggest moving on. "Anytime a partner becomes a competitor – and it actually happens often in many industries – I suggest that companies move on from the partnership," Simons says. "As partners, you're sharing ideas, goals, revenues and business plans. As competitors, you shouldn't be sharing any of those things. Find a new partner."
Scenario 5: Information, Please
A distributor and supplier are working closely on an order when the supplier realizes it has a ship-to discrepancy. The supplier then contacts the end-client directly to clarify the information.
Expert Advice: "Trust matters in business, especially when it comes to solid partnerships," says Power. "If you don't trust a vendor to make a simple call seeking shipping information, then you probably don't trust anybody." Power suggests that the distributor call the supplier to ensure the details are all correct, but it's not worth confronting them about calling your client directly. "If you don't have any other reason to mistrust them, then leave it alone," Power says. "However, don't be absent from the situation. There's a discrepancy on a purchase order, and you're the one who needs to ensure it's correct."
Scenario 6: The Quick Cancel
A longtime client decides to stop doing business with its promotional products distributor after one order was delivered a day late.
Expert Advice: Yes, some clients make rash decisions, whether it's good for them or not. The question of trust, though, is something relating to the future: Do you trust that they'll make similar decisions down the line? "Trust is something that's earned over time, but the effect of it is projected into the future," says Simons. "If this one decision makes you distrust them as a good client, then move on to new clients and focus your efforts on the ones you trust the most. But, if you can keep the lines of communication open and believe that this is an outlier decision, then keep presenting good ideas to them, stay in touch, and be there when they need your services."
Scenario 7: Refund Alert
A client ordered 1,000 mugs for an upcoming promotion. When the order arrived, about 5% of them were the wrong color. After the campaign, the client called the distributor and demanded a refund on the whole order.
Expert Advice: Clients often make demands just to get your attention. You have to assess whether this is one of those times, Power says. "The order had some items that were wrong, so you are culpable here. Offer reduced rates on future orders, even offer to refund the money paid for the products that were wrong, but don't give them a full refund," he says. "A trusting partnership isn't based on crazy demands – it's based on knowing that both sides are hearing each other." Apologize and own the mistake, discuss how you'll ensure it won't happen again, and say you'd like to make it up to them by giving 25% off their next order. Also, on that next order, Power suggests, have the items delivered directly to you, and then deliver them to the client – ensuring everything is correct.
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